What is it called when individuals in the same risk and age class are charged different rates?

The term used when individuals in the same risk and age class are charged different rates is called discrimination. In the context of insurance, discrimination refers to the practice of charging different premiums to individuals who are similarly situated in terms of risk characteristics, such as age, health, and other relevant factors.

Charging different rates for the same risk class can occur due to various reasons, such as differences in personal history, credit scores, geographic location, or other criteria that the insurer believes will affect the likelihood of a claim being filed. The practice is regulated to ensure that it is applied fairly, preventing discriminatory pricing based on prohibited categories such as race, gender, or religion.

In contrast, terms like load balancing and subsidization refer to different aspects of insurance pricing strategies, where load balancing typically involves managing risk across a pool of customers and subsidization means that one group’s premiums may support the costs incurred by another group. Segmentation, on the other hand, involves dividing the market into distinct groups based on certain characteristics but does not inherently imply that different rates are applied unfairly within the same class. Thus, the concept of discrimination is the most accurate term for distinguishing between varying premium charges among individuals who are otherwise similar in risk and age.